Answer for What Exactly Are Annuities?

Posted on: September 30, 2015By: Staff

Your comment made me laugh! And yes, I can answer your great question like a five year old, I’m a master of simple! An annuity is a way of putting money aside now to spend later. You get them through insurance companies. Once you put the money in it, you shouldn’t touch it. It sits for many years growing and waiting for you. Once you get old and need it, you tell it you are ready to get paid. It will then start paying you every month until you a.) use it up b.) pass away or c.) your surviving spouse passes away (you pick one when you get it). They are a way of making sure you have money during your retirement.
They are not a good idea for everybody – (like riding a bike without training wheels for the first ever bike ride) some people have trouble with their bills, and setting aside lots of bill money could be a bad thing, so they have to do what is called a ‘suitability study’ first. It will help figure out if it is a good thing. If the person you talk to doesn’t do one, they are bad -run away! And some of them are filled with hiding fees and costs, that eat away like bad bugs at your money while it is away, so you have to be careful and ask ‘pacifically what the costs are in total for the annuity. If it doesn’t cost too much, it is a good thing. There are lots of types, so ask about all of them and take notes before you even think of giving them your money, k?
I hope that helps, please realize that is greatly simplified. But the bottom line is that the right annuity can be a great part of your retirement plan. Please feel free to contact me for more details, or to answer any lingering questions, okay? Thank you for the ‘funnest’ question I have ever gotten to answer here!